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Coee- anyone out there? Any thoughts as to profits for the second half?
Hounddog, Long time lurker, first time poster as most of the ones I am in have hundreds of posts a day so don't see much I can add to them, this one however...! I personally think the profits for the second half will be similar to the first half, nothing spectacular due to the continuing rapid expansion of the portfolio, but still a profit. I think the profits for the latter part of next year will be more telling as we will be earning from all the sites commissioned this year. It all depends on how much they want to expand and at what rate, they will have to slow down at some point due to racking up the debt, but they are making hay (electricity) whilst the sun shines at the moment.
Share. Thank you for your debut post. I agree next year will probably be their year as they will go in with 1GW. However, I am expecting about $10m profit for the second half (could be more). Compared to the first half I think revenue will go up by $20m (monsoon heavily skewed to second half plus extra capacity) offset by $10m of extra costs. This is mainly interest. Depreciation is over 25-50 years so release of new capacity does not make much of a dent. They are beginning to throw off a lot of cash - $45m in first half (although about $30m went to finance debtors - but because of the ramp up the extent of that is a bit of a one off). In a couple of years they will be more or less self financing.
Hounddog, I like that my name autocorrects to share, how apt! Good point regarding the monsoon season, although they are building quite a few solar farms as well, which will obviously not be performing as well during that period. Heavily skewed towards wind, and I do like the solar as a way of keeping the output up whilst the wind is in low season. I guess also we will see how our consolidation of debt into one easy monthly repayment, (wonder which one of the adverts they rang up to sort that!) will affect profit, got to be a saving there (or why bother doing it?!) I think $10m is a touch hopeful, but knowing how quick they are building it wouldn't surprise me if we had 25% extra capacity than planned by the end of the year, so it may be that high. Agree with the self financing part, which is why I am invested now, this isn't a 10% in a month profit share, this is a buy it now, stick it in a draw and leave it for 5 years, top up when you can. Although it will be interesting to see if they do what the companies are doing over here: building, running for a couple of years, sell to an investment trust to take quick profit to build the next one. in which case SP may rise sooner.
Shaxe. Yes sorry about the auto-correct - stubbornly in action again. The $10m I calculated was not especially optimistic although it is particularly difficult to work out what the interest charge will be. We shall see - this will be a useful base year. They have not indicated there will be any more build this year. However, they are a bit erratic on timings. They said at the half year they would get to 1GW of wind in mid 2017 and six weeks later announced they were already there. Although good news that disconnect worried me a bit. Similarly on solar they seem to be indicating it is a while off (late next year at earliest is the sense) but on quite a bit of it they seem relatively advanced. Once you have got the PPA, land and equipment I think it is a matter of a couple of months to install. So may be much earlier than indicated that we get first solar. As you say, solar will balance out generation. However, I am less sure about profitability. Because solar is much easier engineering wise than wind I think the state auctions for contracts have been very competitive with a lot of chancers pitching very low and likely to go bust if they have won the contract. May in time offer a consolidation opportunity for the stronger IPPs.
Shaxe. The benefit from the refinancing was $4m per year. They did it in March incurring a $6m refinancing charge but saving $1m for the second quarter. For the second half they will save $2m. I agree with you this is one for the long term but it could start to move sharply up soon if results become apparent. I also have concerns about them taking it off the market just as it gets going. However, Ravi Kaillas repeatedly talks about IPOing this in part to give an exit for the Indian Infrastructure Fund mezz finance that matures in June next year. I am not sure what he means as MYT is already public. I think he doesn't see AiM as being public. The mezz finance is not well disclosed but as far as I can see is only about a 10% minority. In fact, if I read it correctly they already have the right under a call option to require IIF to subscribe at INR300 (c$6) per share. Quite why they have not done so is a mystery. Anyway, I am expecting some sort of corporate finance event next year.
Completely agree regarding solar, but with the Indian targets I think there is plenty to go around, also with the fly by nights trying to make a quick buck there may be more money to be had clearing up their mess in the not too distant future. Reckon you are right about this being a Base year, and with experience hopefully they will correct their timings regarding the pipeline programme. You lost me slightly on the finance, I am more technical than financial, I look firstly on what the company has to offer, then whether they can achieve it, and then whether they can afford to achieve it. Not entirely sure it is the right way round but it is all I can do with my experience!!